OpenWeb placed under temporary trustee as former $1.5 billion unicorn fights for survival
The court appointed Adv. Ehud Gindes after the company’s dispute with its primary lender escalated over approximately $20 million in secured debt.
The Tel Aviv-Yafo District Court has appointed Adv. Ehud Gindes as temporary trustee for OpenWeb. The decision was issued by Judge Hagai Brenner as part of proceedings initiated after the company sought interim relief and protection from its creditors.
OpenWeb, founded in 2012 as Spot.IM, develops platforms for managing communities and online discourse on content websites and also operates in digital advertising. At its peak, the company had raised more than $390 million and was valued at $1.5 billion in 2022. In recent years, however, it has fallen into a deep financial crisis. According to court filings, the group's liabilities totaled approximately NIS 177.5 million ($58M) at the end of August, including roughly NIS 61.6 million ($20M) in secured debt and about NIS 98.9 million ($32M) owed to general creditors and suppliers.
Judge Brenner ruled that the company's financial position and the circumstances justified appointing a temporary trustee at this stage, while emphasizing that the decision did not constitute a ruling on the dispute between OpenWeb and its secured creditor. He noted that the creditor's objections to the company's request, together with its decision on September 16 to demand immediate repayment of the debt, reinforced the need for the appointment.
OpenWeb's primary secured creditor is Mars Growth Capital, part of Liquidity Group, which extended a credit facility of up to $30 million to the company. Mars Growth Capital claims that OpenWeb owes it approximately $20 million. The fund sought to enforce its liens and have a receiver appointed, while OpenWeb asked the court for protection that would allow it to continue operating and attempt to formulate a recovery plan.
According to OpenWeb, its cash-flow crisis intensified after Microsoft, a key customer, terminated its engagement, delayed payments and demanded the return of funds over what it described as "irregular traffic." OpenWeb rejected those allegations. At the same time, the company's financial performance deteriorated and it struggled to meet financial covenants with its lenders.
In the days before the court filing, OpenWeb and Mars Growth were negotiating a settlement. The proposed agreement called for an immediate $5 million payment and the release of some frozen funds in exchange for cost-cutting measures, but the agreement was never signed.
In his current capacity, Gindes has been authorized to oversee the proper operation and management of the company and safeguard its assets. The temporary trustee must provide a personal undertaking of NIS 200,000, submit an affidavit confirming the absence of a conflict of interest within two days, and file an initial report with the court within 10 days, including recommendations and possible courses of action.
The court also ordered that the required service of process and public notices be carried out in accordance with the Insolvency and Economic Rehabilitation Regulations.
